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Federated Earnings Drop 57% as Sales Slip

August 14, 2003|From Bloomberg News

Federated Department Stores Inc., the owner of Macy's and Bloomingdale's, said profit tumbled 57% as sales declined and costs rose.

Net income fell to $120 million, or 64 cents a share, from $282 million, or $1.39, a year earlier, when Federated gained from the sale of its Fingerhut unit. Revenue in the period ended Aug. 2 fell 1.5% to $3.43 billion, the Cincinnati-based company said.

Sales at stores open at least a year slipped 1.2%. Federated sold out quickly on some items because it had kept inventory lean.

Department stores are losing customers to lower-price chains such as Kohl's Corp. Federated had costs to close stores, and it has been remodeling stores to make them brighter and more convenient for shoppers.

The company, which still expects second-half profit of $2.40 to $2.50 a share, said same-store sales would be in the range of a 1% drop to a 1% increase. Federated said earnings this quarter might fall to as low as 25 cents a share and fourth-quarter profit might rise to as much as $2.20.

Shares of Federated fell 37 cents to $42.24 on the New York Stock Exchange. They have gained 47% this year.

Second-quarter profit was more than an increased forecast of 62 cents a share, the average estimate of analysts surveyed by Thomson First Call. Federated said last week that profit, helped by July sales, was more than expected.

Profit from continuing operations in the year-earlier period was $133 million, or 66 cents a share, and sales were $3.49 billion.

The company said capital spending would be $600 million to $625 million this year, lower than its estimate of $650 million.

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